francine: former prime minister leads the race to take on marine le pen's national front. trump brings in wall street. the president-elect interviews top investment players in his search for a treasury secretary. and a kinder capitalism. the u.k. prime minister is due to address the business lobby. she will urge corporates to work toward a fairer economy. this is "bloomberg surveillance ." we have another packed week.

the former prime minister is the new front runner in next years residential election. he vaulted from third position in the polls to win the first round of the republican primary, knocking out nicolas sarkozy. angela merkel declares she will run for german chancellor. we ask what a fourth term will mean for investors. but from transition continues as the president-elect interviews top investment executives for the role of treasury secretary. plus, faking the news. facebook says 99% of its stores are accurate but it is going to take steps to do better. we will talk about that in an exclusive interview with vice president. she is nicola mendelsohn. let's get the bloomberg first word news. here's nejra cehic. nejra: president obama says he intends to give donald trump space to read the u.s. and reserves the right to reinstall

himself in the debate. if obama remains involved in the political sphere, it would mark a departure from his recent predecessors. fell furtherrts than expected in october. shipments dropped 10.3% from a year earlier. 16.5%, leaving a trade surplus of $4.5 billion. exports to china were down over 9%. u.s. shipments fell 11%. the polish president has expressed concern that inflammatory remarks around brexit will lead to looser cooperation tween the e.u. and the u.k. he spoke to bloomberg. >> we want ties between europe and the u.k. to be kept even if brexit does go into force. the u.k. is a strong economy. it would be a great loss for the e.u. if it was cut from the

economy and the ties were severed. global news 24 hours a day powered by more than 2600 analysts and analysts in more than 120 countries. francine: thank you so much. this is your data check. i would argue that today in this week the news is politics. we have to figure out what is going into the markets. crude gaining with industrial metals. oil jumping on optimism that opec will agree to a supply cut. the dollar trading near in january high. you can see i also put euro-pound and yen. it has been a busy weekend for european politics. the former french prime minister has become the new front runner in the 20 17th presidential race. in germany, angela merkel announcing she will run for a fourth time in what she called

exceptionally difficult and uncertain times. for more, we are joined by caroline connan in paris and alan crawford in berlin. he vaulted from third place in most polls to win the first round of primaries with the most free market platform among the seven candidates. europe faces existential pressure as the economy's hold general elections next year. >> the brexit deal to europe maybe a deadly coup if we don't react. i wasn't surprised by that vote of rejection. , nationsorget nations always revenged themselves. the dream of federal europe is finished. the european communitarian system as it is today has had its day. we need a more political europe, a more efficient europe, a

europe more focused on strategic priorities that will give back everything else to state authorities. francine: this was an unexpected strong winds. how did he manage this come back when everyone was expecting it to be a sarkozy race? caroline: just like brexit, just like donald trump, european bowls have failed to predict this outcome. they have failed to anticipate that the french voters want a fresh face, a different personality than nicolas sarkozy. four months, the moderate has been the front-runner. a lot has changed. donald trump was elected. you have the candidacy of emmanuel macron. he will continue the fight. >> i have decided to continue the fight.

for all those who believe in me, in my beliefs and the idea i have a france. i believe more than ever the people of france need to turn the page of a disastrous five years of presidency that has taken our country down, and to set up a roadblock to the national front, who want to sound us -- send us down the worst adventure. sarkozy -- [indiscernible] juppe ares of alain now pretty low and francois fillon is likely to become the nominee. francine: talk us through the electoral system. it is different to any other country. we haven't heard from the left. choosing theirht candidate. how likely is it that he will face marine le pen?

this is a very different system than the united states. in this presidential race, at the moment, these republican -- most european bowls show that marine le pen should be in the second run next year, meaning the republican nominee will likely face her in this election next year. francine: thank you so much, caroline connan in paris. former prime minister francois the frenchled thatcherite. angela merkel has announced she is seeking office. alan crawford joins us. now that she has declared that she will run, what are her chances of winning? polls would

indicate that there's a good chance her party will come first in the elections next on them -- are autumn, but there various hurdles she has to overcome. she has to be reelected party chairwoman in the first week of december at the party conference. while everyone expect that to happen, there may be some indications of a groundswell of some opposition. then she has yet to receive the backing of her sister party. this is the csu run by the per variant -- the bavarian prime minister, who has been very critical of her refugee policy. all the refugees coming into germany come through bavaria. it is unclear whether they will deliver their backing, what it would actually mean if they

withheld their backing. thirdly and perhaps most importantly, there's the potential for any kind of unforeseen upset. for example, what happens if the refugee deal with turkey collapses? what happens if the euro crisis bubbles up again or there were to be some kind of terrorist attack linked to radicalized immigrants? francine: thank you so much. alan crawford there who leads our european government coverage. let's welcome xenia wickett. thanks for coming in. we're going to talk about the u.s. in just a second. we had big news over the weekend. can we look at the donald trump presidency and translate it to what it could mean for what europe could look like 12 months from now? xenia: great question. given the brexit vote going against the polls, the trunk

vote, both kind of a nationalist vote, what does that mean for marine le pen? say, 10 days ago the odds of marine le pen winning in france increased tremendously. francine: francois fillon is the right-wing candidate. he's not extreme, but he's anti-labor. he wants to reform. explain this economic malaise that we saw in france. they are just coming out of a social presidency for a long time. if you have a candidate like pen, doesst marine le it water down her chances of winning? xenia: everybody expected sarkozy to do very well and go to the next round and he didn't. i wonder how much of that is to do with, he's a phase we all know, people wanted change -- again, not that fillon is change per se, but he's putting forth a

new agenda. it is interesting to look at whether the nationalized vote -- what is interesting in the united states is the economics didn't necessarily play. a lot of people who weren't in the lowest economic run were voting for donald trump. it is less clear how the economic agenda fits with the trend you saw in the united states. francine: if you look at donald trump, and we went through the people, and a lot of that had more than $65,000 income a year, but it is people that feel left out from globalization. they feel somehow that they've been cheated the system. xenia: that is the fundamental problem. in the u.k., the united states, france, germany as well. there's a significant portion of society who do feel like they've been left behind. the recession hit them badly. growth has returned but not for

these people. saying,a lot of people why aren't you dealing with me? the next president of the united states, the next prime minister in paris, is going to have to deal with, how do we put in place policies to bring a little more equity? francine: and how do you do that? xenia: we don't have the answers to that. everybody is watching the united states to see if trump will be able to do that. the french will be following. the germans will be following. francine: thank you so much, xenia wickett. coming up next, we look at trade deals including what donald trump's interviews -- he is interviewing top executives. we will get the latest on the new white house. plus, facebook outlines plans to increase its headcount, hiring 500 new staff. we will discuss that and much dna vice the company's

president. what would a failure of the tpp deal mean? this is bloomberg. ♪

francine: this is "bloomberg surveillance" live from london. president-elect donald trump has been interviewing executives for the role of u.s. treasury secretary. let's can the latest on the trunk transition with michael mckee in new york. with me here in london, xenia u.s. andhead of the americas program at chatham house. there doesn't seem to be any

consistent theme or message from trump's appointments so far. >> he has rewarded loyalists with those he's appointed like jeff sessions as attorney general and reince priebus as white house chief of staff but he still continues to interview a lot of people who would not have fit into his campaign and in many cases actively opposed it. over the weekend, mitt romney, who came out early and strongly against trump was apparently interviewed to be secretary of state. no word on whether he would get the job, but he is under consideration, which may not play well with mr. trumps supporters. he spoke with wilbur ross, a longtime supporter, and with jonathan gray and david mccormick. three possible candidates for treasury secretary. formerentioned, the goldman sachs executive, still considered the favorite.

no rhyme or reason for who he's taking or why. francine: we heard wilbur ross, someone from blackrock who is actually a democrat. >> there's been talk about whether trump would want to reach across the aisle. he has suggested he would, although much of what he campaigned on was demonizing the democrats. it isn't clear how far he will go with that. presidents have done that before, but usually not to import in policymaking roles like treasury secretary. they put them in places like the transportation department. francine: you were in peru with christine lagarde. that is also where president obama was. what does he have to say? >> he basically urged all the world leaders to give trump the benefit of the doubt. it is apparently obama's belief that the realities of the office will reshape some of his more extreme positions.

you can't do as much as you would like to do by fiat and he will be constrained once he gets into office. the president said, let's wait and see what kind of government he puts together and what he tries to do before anybody and experience francine: -- before anybody panic's. francine: thank you so much. would it be a strong signal if he does put a democrat or someone who is not a loyalist, who signals to the market that he's a loyalist, and that it is a team of diverse backgrounds? xenia: it would be a huge signal. what he said in his victory speech was very conciliatory. he's certainly talking to all of america, or many in america. he's talking to democrats. he's talking to mitt romney, who came out strongly against him. but thus far he's appointed loyalist.

what we don't know is whether he's talking to them to create the impression that he's open but he's actually going to end up putting in place loyalists, or whether he's willing to have a more open discussion with people who don't necessarily think like him. francine: the markets believe that he will reflate the economy. he's promised $1 trillion in spending. what would be enough to convince the markets that he will rebuild infrastructure and get things going? there are a couple issues where he can work across the aisle. infrastructure is one of them. it is something clinton talked about a lot. there's an issue where i think that there's little doubt that he's going to focus early on building infrastructure. that will have a positive effect on the economy. it will have a negative effect on the deficit because where is that money going to come from? francine: that is the trillion dollar question.

business leaders from around the u.k. are gathering in london for the consideration of british industry's annual conference. anna edwards is there for us. thanks, francine. we are joined here at the cbi, confederation of british industry, gathering in london. nicola mendelsohn has joined us, vice president for the emea region at facebook. great to have you with us. as we compete with the announcements in the room behind us, alerting the delegates to what is happening, you are making an announcement of creating jobs in the u.k. why so much confidence? nicola: we think the u.k. is a fantastic home. we've seen real growth here since we've been here in 2007. we were just a handful of people. we are delighted that we're

going to be announcing that we're going to increase by 50% the number of people here in the u.k. by next year. we will take our numbers to 1500. that is 1500 highly skilled workers. we will also have new headquarters. anna: how concerned out brexit are you? are you basing this decision around everything you've heard in public? do you have assurances from the government behind the scenes? nicola: we see that it is already an amazing ecosystem. this is irrespective of exit. brexit is still too early to say what is going to happen. we are developing new products right now, products like workplace, our first global launch outside our headquarters, actually launched here from london. we are excited to see that. we also have a high-tech design facility in somerset. that is building our unmanned planes that can fly at twice the

height of commercial aircraft. it will be able to go into places like sub-saharan africa, rural india, and bring internet to the people that don't have internet connectivity. anna: it sounds like you're going to need to hire a lot of people. how much are these planes contingent on being able to access talent from other parts of the world? arrangementbrexit that means you can't have access , that immigration is not open enough, can you pull back on these plans? nicola: we are committed to the plans we are announcing today. i think the brexit plan is still too early. we are excited about the growth we're seeing in the u.k. and also the impact the platform is having on businesses in the u.k. we have 2 million small-business owners using the platform, half of which are women. they are growing their

businesses because of the platform. currently we have 300 million people in countries like germany, france, brazil, japan, that are connected to a small business in the u.k. that is the success story we are most proud of. anna: we talked a little bit about brexit. this has been a year of political surprises. some have suggested that fake news being shared on social media has been one contributing factor to some political surprises, not least of which the victory of donald trump in the u.s. election. does facebook have a case to answer with regards to fake news? people get their information from all over the place. i think you get your information from lots of different places. there has been a lot of conversation about fake news on facebook. it isublicly said that

something he's been looking at and we have been looking at for a while. the amount of news in our site that you call fake news is very small but we are not satisfied with that. we want to make sure people are seeing the information that matters most to them. we're also doing more work and mark recently announced the seven different measures we are looking at. we take this area very seriously. mark has also said that facebook needs to be very careful, being arbiters of truth. if you are playing in the news distribution business, there needs to be a line somewhere. how much is this facebook's problem? nicola: what we're looking to achieve is that people -- remember, this is 1.8 billion people, each with their individual news feeds making their choice about the source of information they want to see, and we are committed to making sure that it is a safe environment for them, that they are getting the information that

they want to see, as well as from the different news sources. anna: are you doing investigations as to whether fake news played a part in the brexit vote? nicola: what we're really interested in is making sure the newsfeeds you are seeing are the ones that really matter. what we really want to see is that you can connect with the people that matter to you. ultimately that is the heart of what we want to make sure facebook is. anna: thank you for joining us. nicola mendelsohn from facebook, vice president for emea for facebook. francine: anna edwards there. this is a picture for the markets. oil jumping on optimism that opec will have a supply cut. iran's oil minister was saying it is probable that members will reach a consensus.

that is according to comments published in the news on the ground. european stocks are down 0.7%. the vix index, we're seeing quite a lot of swings. 4.4% higher. euro-pound, 86. the dollar trading near a january high, with traders convinced the fed will pull a trigger on a rate hike. theresa may is due to talk at the biggest u.k. business lobby in less than 20 minutes. can she mend bridges? what kind of capitalism does she foresee? that is what we will be finding out next. this is bloomberg. ♪

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private wifi for your business. strong and secure. good for a door. and a network. comcast business. built for security. built for business. francine: welcome back. this is "bloomberg surveillance ." let's get to the bloomberg first word news. here's nejra cehic. nejra: donald trump has interviewed top executives for

the role of treasury secretary. at least three potential candidates with deep wall street experience attended meetings in new jersey over the weekend including wilbur ross and jonathan gray. president obama said he intends to give donald trump space to leave the u.s. and set his own agenda but is reserving the right to reinsert himself into the public debate if he thinks american values are at stake. in aama remains involved political spear, it would mark a departure from his recent predecessors. japanese exports fell further than expected in october. shipments dropped 10.3% from a year earlier. 16.5%, leaving a trade surplus of $4.5 billion. exports to china were down over 9%. u.s. shipments fell 11%.

the polish president expressed concern that remarks around brexit will lead to looser cooperation between the european union and the u.k. andre duda spoke to bloomberg. want ties between europe and the u.k. to be kept even if brexit does going to force. the u.k. is a strong economy and it would be a great loss for the e.u. if it was cut from the u.k. economy, and the ties between the two were severed. nejra: global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. i'm nejra cehic. this is bloomberg. francine: thank you. if donald could trigger a global selloff, wait until you see what he does to the euro. that is the take from marcus ashworth. marcus spent years in the banking industry. he is now guest hosting with me almost every day.

you have great stuff out there. i urge our listeners and viewers to check out marcus' latest piece. talk to me about the markets. it has been a very political weekend. are the markets ignoring it? >> i think so. again,is going to stand so that is confidence. so far what we are seeing in trump's choices, there are sensible people. on that sense, it is fine. with fillon in france and sarkozy dropping out, that seems like an interesting choice. juppe. probably beat man toe: is he the right take on marine le pen? he seems to have very clear ideas that are similar to ours, quite right-wing, but none of the extreme stuff. >> in some senses, it is not

really near thatcher, but for france, it is. it could be more in common with a trump administration. in that sense, perhaps a merkel administration as well. obviously macron is the one to watch. whether the left can unite around him, he doesn't have the party infrastructure on his own. .e can see that trump didn't have a base to start off with. francine: talk to me about trump. he wants to spend $1 trillion. it is unlikely that he will get one trillion. even if he gets 10% of that, what does it mean? between is a big gap what the republican party has been saying as to what they really would be able to get through congress and keep everyone happy. nonetheless, there is no doubt about it. the united states needs a lot of

infrastructure. there is a lot of stuff that can be done. it is a question of prioritizing. i think that is what the market is going to focus on. francine: what does it mean for dollar dynamics? it is not clear that it is dollar positive from now on. >> i think it is. it is a question of whether the trump administration starts to make some sense and plots things out in a logical fashion. dynamic ofust the infrastructure. there's overall emphasis on reintegrating the economy, getting to sustained 4% gdp level. the u.s. has been at this 2% stall speed dynamic. over the last few decades, if it goes above 2%, it tends to get into a proper recovery. if it fails to hold that level, it often switches to recession. is finally as sustained fiscal push, a

coordinated white house and congress might make the final move up. francine: let's say they get away with this. what does it mean for mario draghi? does he need to pressure brussels and juncker to do their bidding? >> i think he's tried his best. he's done everything he can on monetary. is he running out of road? he knows he is. one there. we really need some sort of coordination on a fiscal approach in europe. do you worry about the italian referendum? >> very much. the opposition in this are all anti-euro. lindsay is starting to make the understandable thing, i will resign, government will collapse

-- francine: he's a technical administration. renzi was never really voted in. onlynetheless, that is the likely upside for italy in that sense. attempt having one last to see if he can win, but the polls are not in his favor. that is quite a scary thought. francine: we haven't had polls for a wild, but something we need to keep an on. marcus ashworth from bloomberg gadfly. check out his piece. dark days for the euro. stay with "surveillance." plenty coming up. the new republican front runner in france pledges to shrink the state. theresa may speaks at britain's biggest business lobby in just a few minutes. merkel is in the running in germany. sarkozy is out in france.

what the political news means for europe. this is bloomberg. ♪

francine: this is "bloomberg surveillance." let's get to the bloomberg business flash. here's nejra cehic. nejra: cyber security giant symantec is buying lifelock for $2.3 billion. lifelock would also be pursued by ppg and evergreen coast capital. its shares are up 45% this year. facebook plans to take on another 500 workers in britain. the move will expand their presence in the u.k. by 50% as the company opens its new london headquarters next year.

we will be talking to nicola mendelsohn. that is on the program. incoming u.s. senate minority leader chuck schumer says he has the votes to stop president-elect donald trump from repealing the dodd frank act. schumer told nbc that the democrats would get help from republicans in any such fight. trump has said he would scrap the act which attempted to put in place new rules that would prevent a repeat of the 2008 financial crisis. francine: thank you so much. a last-minute rush of support for francois fillon in the republican primaries as knocked nicolas sarkozy out of the presidential race. he is running on a free market platform, pledging to lengthen the work week, increase retirement age, and add immigration quotas. -- thank you so

much for joining us. it may come as a surprise. as a lot of the world is watching paris and france, to go from someone who is described as the french thatcher right, how much of a thatcher right is mr. fillon? >> it seems like the sleeping beauty could the awakened. francois fillon has a very liberal program. he wants to cut public expenditures. it is interesting that at the time everybody else is doing stimulus, that france is tightening their belts and doing reforms. he is the guy for that. he's been the first one to take out these points compared to his competitors, and maybe the french are ready for more reform. francine: what is the likelihood

that he will face marine le pen in the presidential race next year, and if he does, what are his chances of winning? is the economy so bad that people do want someone from the right? everybodyi think that has been fantasizing about a trump moment also for france, where the nonmainstream candidate could be the final winner. i don't think that. illon as a credible program. he might not be the show men that sarkozy was. he might not have the legacy that alain juppe has, but he reassured the markets. sense onvery strong the value on the family side. to a certain extent, on the economic standpoint, he wants to make the reforms that france has been long waiting for.

he stands a good chance against marine le pen, but let's not put the cart before the horse too early. there are also candidates like emmanuel macron. it is not finished yet. we will see what will happen. francine: how much do you worry about the economy of france? unemployment is high. when you look at labor reforms, some of them have been done by emmanuel macron when he was finance minister. how much more could be done? >> personally i'm not worried about france. i think france has been a sleeping beauty. we've been resilient throughout crisis. we've been trying to protect our safety net. now the problem is, do we want more private led growth? illon wants to make sure that corporate tax goes back to the

european union. the idea is to see if we can do some supply-side reforms when we think the man is kicked in. we know demand is fragile because of the very cheap oil prices, because of the very accommodating monetary policy. the question is how are we going to do it? francois fillon those for shock therapy. the question is whether france can absorb the shock therapy. all the waysitions from the unions to the middle class. if you have reforms that are very regressive, i don't think they will be easy to implement. it will be the proof in the pudding. france, i think, needs another set of reform. we've been reforming, maybe slower than other countries, and the question is, will we maintain our deficit below 3%? will we finally unleash private

sector growth? we've been targeting innovation to make sure the french companies are going out of the european union. we need more room to maneuver when it comes to the corporate sector. francine: you have to fix employment. things are looking better in terms of corporate spending. there's demand, but the problem is unemployment. it is so high across europe. does the shock therapy that francois fillon is talking about -- will it fix employment? >> this is a very interesting point. francois fillon compared to alain juppe is much less progressive on lowering the tax burden on jobs. he wants to do it for all type of salaries. you talk about structural unemployment. france is around the 10% mark, which is a lot. the question is whether more

flexibility will save jobs in france. intermediation, lifelong learning, now the question is whether changing the contracts will actually have an impact. my own personal concern about this is, i don't see so much new supply of jobs in the markets. jobs for the new people entering the job market. will there be something specific for the youth, to make sure they don't have a carrying effect? i agree with you. it has been a jobless recovery like all across europe. what i'm sure about is there's a need for doing a little bit more. francine: thank you so much. at prime minister is talking the cbiz. let's have a listen.

>> to lead the world in understanding the extent to which some people feel left behind by the forces of capitalism, embracing a new approach that ensures everyone shares in the benefits of economic growth. today i want to talk about how, by working together, we can seize that opportunity and deliver the change that people want. but it is not just an opportunity. it is a responsibility too. for we believe in free markets. they are the means by which we spread opportunity and lift people out of poverty. we believe in capitalism, the means by which we drive economic growth, putting people into work to provide for their families. we believe in business. the entrepreneurs and the innovators who employ millions of people up and down this country, the basis for our

prosperity. the conservative party and the government i lead will always believe in these things. just tohere today, not reaffirm these core beliefs, but to say that if this is what we value, we need to be prepared to adapt and change. for if we support free markets, value capitalism, and back business, and we do, we must do everything we can to keep faith with them. with not enough people feeling that they share in the wealth created by capitalism, and with the recent behavior of a small minority of businesses and business leaders undermining the reputation of the corporate world, the way to keep that faith is to embrace reform. to do things differently. to recognize that some people,

particularly those on modest to low income, people worried about the future of their children and their grandchildren, see these forces well working for a privileged few, but not always for them. want to ask you to join me in shaping this new approach and seizing this opportunity. i want to ask you to work with me to show that the forces of capitalism, globalization, and free trade offer the best hope for the problems facing so many people in our country. i want you to help me show those who feel let down, left behind, or marginalized, that we can respond. we can change. and together we can meet this great national moment with a great national effort, to seize the opportunities ahead and build a stronger, favor britain, a country that works for everyone.

so this is a true national moment. the decision of the british people on the 23rd of june gives us a once in a generation chance to shape a new future for our nation, the chance to build a stronger, favor country. that is the kind of change people voted for, not just to leave the european union, but to change the way our country works and the people for whom it works forever. and i'm determined that we will deliver the change they need. we will do things differently. not carrying on with business as usual, but opening our minds to new ways of thinking. those of us in government and in business too. for government, it means not just stepping back and leaving you to get on with the job, but stepping up to a new active role that backs business and make

sure people in all corners of the country share in the benefits of your success. for business, it means doing more to spread those benefits, playing by the same rules as everyone else when it comes to tax and behavior, and investing for the long term. all things i know that the vast majority of businesses do already. , byjust by creating jobs supporting smaller businesses, training and developing your people, but also by working to give something back to communities and supporting the next generation. i have no doubt at all about the vital role business plays, not just in the economic life of our nation, but in our society too. as prime minister, i want to support you to do even more. that is why, when the chancellor delivers the autumn statement on wednesday, he will lay out an agenda that is ambitious for business and britain. he will commit to providing a

strong and stable foundation for our economy, continuing the task of bringing the deficit down and getting out of debt falling. actionsbuild on the that our independent bank of england has taken to support our economy and he will do more to boost britain's long-term economic success on the setting out how we will take the big decisions we need to invest in infrastructure so that we can get the country and business moving. and he will show how we will do everything possible to make the u.k. outside the e.u. the most attractive place for business to grow and invest. i know that leaving the european union creates uncertainty for business. i know that some are unsure about the road ahead or what your future will look like. there will certainly be challenges. a negotiation like the one on which we are about to embark

cannot be done quickly or without give-and-take on both sides. but there are opportunities too, opportunities to get out into the world and do new business with old allies and new partners , to use the freedoms that come from negotiating with partners directly, to be flexible, to set our own rules and forge new and dynamic trading agreements. opportunities to become the true global champion of free trade. and opportunities to demonstrate how a free, flexible, ambitious country like britain can trade freely with others according to their own best interest and those of their people. that is our aim and our ambition. i believe that if we approach the difficult negotiations to come in the right way, we can strike a deal that is right for

britain and for the rest of europe too. and the right approach is not to rush ahead without doing the grunt work, but to get our negotiating position clear. it is not to replicate the deal any other country has but to craft a new arrangement that is right for us and europe. a strong e.u. is good for britain. it is not to provide a running commentary on every twist and turn, but to acknowledge that businesses and others need some clarity. so where i can set out our plans without prejudicing the negotiations to come, i will. we've been able to set out a timetable for triggering article 50 four march next year. i want an early agreement on the state of u.k. nationals in europe and here so you and they can plan with certainty. we've been in gauging heavily with businesses to understand

your priorities and concerns. we will continue to do so. while the negotiation will be critical, we must not lose sight of the wider message people sent on the 23rd of june. we must use this opportunity to build a more prosperous, more equal country, where prosperity is shared and there genuine opportunity for all. we've already received massive votes of confidence in britain's long-term future from some of the most innovative companies. nissan's decision to build next-generation models in the northeast, securing 7000 jobs, a record 24 billion pound investment from softbank in britain's future, a 500 million pound expansion and 3000 jobs from jaguar land rover, a 200 million pound investment from from, 275 million pounds

glaxosmithkline, investment from apple, one billion investment and 3000 new jobs from google, and facebook have announced a 50% increase in their workforce in the u.k. yet there is more that government can do. not just to encourage businesses to invest in britain, but to ensure those investments benefit people in every corner of the country. francine: u.k. prime minister theresa may urging businesses to work with the government to ensure the benefits of capitalism are shared more equally. we will have plenty more on that. "bloomberg surveillance" continues. i will be joined by tom keene from new york. this is bloomberg. ♪

the french former

prime minister leads the race to take on the national front in next years presidential election. president-elect's interviews top investment players in his search for treasury secretary. will he go beyond his inner circle? and the prime minister addresses written at this hour. it incorporates to work together towards a fairer economy. she is speaking live now. this is "bloomberg surveillance." we need to try to understand what the prime minister in the u.k. is talking about. she is clearly saying that businesses need to adapt and change to make sure the benefits of capitalism are shared equally. this is important. this the first time this will be delivered. tom: what is important about this is she was listening to "bloomberg surveillance" last week. and the summary that hugh and i heard is that she can change the dialogue with tax.

they have to change the tax law to incentivize her new capitalism. francine: right. she is looking at. i would argue that when you are dealing with brexit and if you are seem to be pushing away businesses than we don't know what the country will become. it isn't a value judgment but she needs to tread carefully. tom: sterling weakness. francine: let's get straight to the bloomberg first word news. has endedgela merkel the speculation, she will run for a fourth term. she is positioning herself for building in uncertain times. ae says she intends to serve full four-year term as long as her health allows it. in france, the new front runner the presidential election is the former prime minister. he won the first round of the republican primary.

he has had the most free market platform and the candidates will face each other again in next sunday's runoff. nicolas sarkozy has been knocked out of the race. topld trump is interviewing executives for the job of treasury secretary. among those meetings were bridgewater associates president, wilbur ross and jonathan greg, global head of real estate. global news, 24 hours a day. powered by our more than 2600 journalists and analysts, in more than 120 countries. i am taylor riggs. this is bloomberg. thank you so much. let's get to the data equities. let's get you set for the week. in the united states -- thanksgiving. monday, tuesday, wednesday, friday. futures flat. oil with a two day bid. next screenplays. , optimism on the equity

markets. the two-year, a change. at the bottom, 49 .82, a huge deal for the philippines. a signal to the emerging markets who flat out give way. weakness continues. francine: this is my data check. oil jumping on optimism. down.n see the stoxx 600 the dollar is trading near a january high. traders are betting on the federal reserve hike. would argue that today is not a markets day. it is a political day and it will take a couple of weeks for the market to get on top of what we heard over the weekend. tom: the french elections were stunning.

i believe that was sunday? francine: late last night. the wall. go to the bloomberg terminal. let's get ready for margin let's get ready for martin feldstein. ehe red circle out to the right is a projection. this is the deficit trend. and theonomics dynamics. the what-ifs, as we move forward. the clinton surplus is the peak in the middle. the late 1990's. a great chart. definitely the bigger picture, what the markets want to know about. it is a quiet day on the markets.

this is another way of looking at funding and reflationary helped that donald trump is putting out there. this is a measure of commodities, shipping costs and the two-year high. this is when the election happened. you can see it was already on a higher trend. again, donald trump campaigned investing $1 billion in infrastructures. so we were looking at copper and iron ore. now, let's discuss european politics. the former french prime minister leads the race to take on the national front-runner. wickett.ined by xenia you with us is -- thank both. it feels like a political day. what do the french primaries

teach you? french are craving for some kind of reform. t, probablya bri not. >> it has been a dynamic weekend. lon that filol will take the presidency. he came with a 44%. they are likely to gravitate towards him. he will most likely take him in may. and in that context, he will likely win. so there is absolutely a backlash against the establishment. fillon, it case of phil may not be the case. francine: does this mean that

the french economy will be on a better footing? he certainly needs to deal with more labor and making companies more flexible. >> looking at the currency perspective, politics is everything. it is the new economics for us. at the moment, it is very uncertain exactly what is going to happen. whether he does win the next round of this primary. and how that works out. so at the moment you have a significant amount of uncertainty. the euro is negative for the time being. but we do have the strong view he wins than it is hard to see significant euro downside. tom: i look here at france and i find it telling that prime minister may is speaking on the new capitalism she wants.

is there a new capitalism in france? we will go to prime minister theresa may now, she is still speaking. this is normalized u.s. in france, gdp over 35 years. the u.s.,line is persistent and up and france with two bouts of not getting it done. what kind of capitalism does the new france need? mujtaba: a great question. u.k. hasay in the completely redefined the center ground. she is appealing to 52% which implies controls on immigration, industrial policy, deficit spending -- stuff that even jeremy corbyn isn't even saying in the u.k. in france, it is a different type of capitalism. but it is further to the right. more ambitious than francois

sarkozy are willing to commit to. a hawkish stance on foreign policy. look theye particular are putting forward. tom: we are showing the british prime minister speaking. taking questions, it appears, right now. sterling weaker on the speech but i don't want to overplay that. when i look at jonathan fenn be 's wonderful new book, the idea of an attitude of a france in another time and place, is there a generational change that makes paris and france more anglo-saxon? i know that is a loaded question. and the hate mail will come in. i think there definitely is a desire among large segments of the population

for economic performance. sarkozy was elected on that platform. although he then delivered very little over the course of his presidency. thatn is playing to population. reducing the size of the state. upending the 35 hour workweek. cs.cal politicia i do think this will make it more competitive with right wing voters. tom: a great way to get started after an interesting weekend. rahman with us. we will look at the adjustment that everyone is making for the outlier hsbc calls. in the next hour, where will tin feldstein be in two

years? worldwide, this is bloomberg. ♪

francine: this is a "bloomberg surveillance." lacqua in london, tom keene in new york. let's get to the bloomberg business flash. highly iran says it is probable that opec will agree to a cut in production next week. they will offer new perspectives on cutting. the price of oil has rebounded since hitting the lowest level in two months last week. bank executives planning to move operations out of the u.k. have

been told to relax. the european central bank says there will be no first mover advantage when it comes to betting regulatory approval. that is according to people familiar with the discussion. that is your bloomberg business flash. tom: this is most interesting. bunning andnic mujtaba rahman with us. a weaker sterling. have you had to amend that call? have you changed your sterling call? not.ic: absolutely we are very bearish on the pound. the structural and political challenges that the u.k. faces are not getting any better or asier with or without trump president. so our view on sterling was a strong political view that brexit would be difficult. wouldn't be an easy transition and it would create a huge amount of uncertainty.

and the current account deficit would remain wide and that remains in place. pound needs to keep weakening. tom: a cool chart. line is the advent of the hsbc outlier call of the past 110. with that said, what is your dollar call? if you have to amend that as steve major looks for higher interest rates and inflation? dominic: for a broader dollar view, we are becoming more only should with trump, particularly with emerging markets. but the point we are making is that politics is the key driver of fx. and to have a strong view on a currency, you need a strong political view, as well. and for the likes of the euro and japan with the yen, we don't

have a strong conviction on the political outcome. and where we do have strong views, we think the dollar will continue to rally. currencies that are more exposed to global trade, they are going to keep coming under pressure. and what is interesting at the moment is that a lot of people look at the u.s. and say donald trump will do these good things for the economy. allwe are forgetting about of the negatives around global trade that he was pushing in the election campaign. and at some point, we have to price in a higher risk of that happening. know and cope what do we about a possible fourth term for -- right, and what do we know about a possible fourth term for angela merkel? she has for europe, been the anchor leader for the european union.

through many crises if we are talking about greek debt, refugees, the russia-ukraine conflict. so given the uncertainty around the integrity of the union and , difficult elections in austria and the netherlands, having her in charge and giving coherence to europe is important. it becomes even more important in a context when you have trump in the white house, upending the institution's post 1945. so it takes on a degree of global geopolitical importance. francine: you can see that from a european point of view that donald trump will force politicians to do more fiscal spending. mario draghi has been up there saying he cannot do it with monetary policy. so europe is ignoring it. is this an inflection point for europe? do we need to spend and get people voting for us? mujtaba: to a certain extent

there will be a rebalancing on the macro economic mix. in the u.k., we are moving towards more fiscal spending. a pass togiven again increase.i and is there a rethink about fiscal policy in europe? certainly not. it is institutional. there are rules. . i don't thinks you're looking at substantial change but in the margin, different countries will be afforded a degree of flexibility. in the euro area, the first best strategy would be for northern europe to spend in southern europe. that will never happen. the second best strategy would be for northern europe to spend more in northern europe. tom: here is the index, you can

see the leg up. what i want to know -- will we have a cabinet of donald trump talking about a strong dollar policy? ross or secretary minutia and -- will they be talking about politics of the late 1990's? it will be the other way around i think. being imposed on chinese imports -- so if anything, currency manipulation and those charges being targeted at china would suggest that trump would prefer a weaker dollar. so i think it is not coherent what we will get out of the white house in terms of the dollar policy. i think we will get a stronger dollar as a byproduct of greater fiscal spending in the near term. to go back to the point about fiscal policy, we have to ask the question further down the road -- will fiscal policy solve

all our problems? that is the question we need to answer. we will be back with dominic bunning and mujtaba rahman. later today we will hear from jeremy corbyn. this is bloomberg. ♪

francine: all eyes on the u.k. businessn's biggest

lobby -- we heard theresa may urging businesses to give something back. she is rethinking capitalism. tom: are you kidding me? isncine: look, this something that she cares about deeply. we understand from insiders that she interpreted that this is what people want. tom: jim o'neill and michael it.er care about it takes incentives. where are the incentives? francine: we are back with mujtaba rahman and dominic bunning. the prime minister was talking which is statement -- the budget which is being presented on wednesday -- the problem is, they are dealing with exit. if they cut down too much on businesses, will it make this country uninvestable? mujtaba: an important part of the puzzle. of the is a micro piece

macro question. the macro question is -- where are we going to end up in our relationship with europe? that will ultimately determine u.k. gdp and the sustainability of the u.k. economic model far .ore important let's be clear, hammond doesn't have the backing of his whole party, regarding what he is trying to achieve in the awesome statement. each is why you have the narrative around the contingency -- we may move to a more aggressive stimulus. these are symbolic measures. will he be a member of the customs union? the -- be a member of how does that affect the u.k.? are but: seen as there not business friendly and you have a clean cut from the

european union, what happens to the pound? keepic: the pound has to falling to address the ongoing uncertainty. if you get fiscal spending, a boost, it could have an occasion for higher interest rates and be currency supportive. -- forblem for the found the pound is that it is not trading on a cyclical basis, it is trading on a structural story. a structural basis. does it keep going? i don't think it does at this time. francine: we are back with both of our guests. and we are back where we speak to the president of -- this is bloomberg. ♪

a economics, finance investment and international relations. an interesting week in europe. right now, to get you updated, our first word news with

taylor riggs. taylor: syria has rejected a proposal for a truce in aleppo. the truce demands that rebel forces withdraw from the city. close to 200 civilians have been killed in aleppo since government troops renewed their assault last week. in northern india, rescue troops have finished searching the mangled cars of a train. 120 people were killed and another 150 people injured. he intendsbama says to give donald trump space to lead the u.s. and set his own agenda but he reserves the right to reinsert himself into the public debate if he thinks core american values are at stake. he spoke in peru after meeting with asian-pacific leaders. global news, 24 hours a day. powered by our more than 2600 journalists and analysts, in more than 120 countries. i am taylor riggs. this is bloomberg.

thank you. let's get straight to the conference in london where theresa may was speaking 15 minutes ago. she said that the awesome utumnment -- the a statement would be revealed this week. theresa may, the prime minister, talking about productivity and investments in the u.k.. and about a partnership to sell who feeltion to those left behind. talking about an economy that appeals to all. khan, thank you for joining us today. she talked about industrial standards. that means a lot of different things to different people. paul: we really see industrial strategy about partnership.

to be more together innovative and productive. number ofds: a businesses are making commitments and investments in the u.k. since the brexit vote, carmakers and technology companies. not all the businesses have the answer. more investments in the u.k. since the vote? big: we took some investment decisions before the referendum and we are continuing with those. we have a new center in bristol. world-class advanced manufacturing going into north wales. anna edwards: what assurances do you need from the government to follow through on the plans? paul: what we look for our clarity and consistency. it needs to be long-term.

because when we make an aircraft, it might take us 10 years to develop an aircraft that is in service for 30 years. so we need a consistent and clear approach from government. kind ofards: what trading relationship do you need with the rest of europe? being able to trade freely with others for best interest which went suggest to some people leading the customs union. would leading the customs union be a problem for airbus? paul:others what we need is to e freely with europe. flies, itrbus has british wings. but of course, it needs landing gear and that comes together in europe. we need to be able to trade freely with europe. what percentages are made in the u.k.?

it takes on significance. paul: it varies by aircraft type. it can be very british so i don't want to give you a precise figure. we often use rolls-royce engines and manufacturing here in the u.k.. britishelighted by the supply chain but we have to come together. on britishthe threat made parts reduce the attractiveness? could that sway opportunities? we are not looking for additional tariffs or barriers. we are focused on making a globally competitive aircraft. to see parts have of airbus three competing with contracts? i'm assuming things are set in stone out to a certain point but then you have to apply and re-compete? we have suppliers from all

over the world. and the british aerospace industry is an important part of that. we have 25% of the world's communication satellites in britain. so by working closely with other countries, particularly france and germany, to supply the world. of your satellites could be carrying this conversation around the world. thank you very much, paul kahn, president of airbus. great interview. that really goes to the implications of dealing with for hisnd what it means employees and what it means for exports. we are back with dominic bunning and mujtaba rahman. coming up next, we focus on the global trade implications. when you look at brexit, we are none the wiser. about what kind of brexit we are

looking at. when and how the negotiations will play. i think the polish president ofe today in favor continuing to talk with the u.k. -- is there not going to be a reversal? if you see more extreme politicians coming in -- donald trump could help theresa may with this rhetoric -- saying that we need this with safety? mujtaba: i think we can connect dots and make a strong argument that the government will not seek membership of the single market. they can't if they want to control immigration. and they also will not seek ownership of the customs union. turning up with theresa may on a trip to india, talking about -- i don't think we are looking to be members of either, and as a result -- francine: why can you not have a prime minister who says, brexit

is brexit and it means we say goodbye to europe? mujtaba: she has to balance internal constraints with her own party. pushing her for a hard brexit. there are 50 pro european pushing her in the other direction. i don't think she wants to reveal her negotiating plans. the only peas of this that pushes us in a different trajectory is the supreme court ruling that mandates the route of parliament. we know the supreme court will mandate a role for parliament. the question is, what type of role? , willmprehensive or not be legislation be on exit around article 50? that provide space for a lot of amendments from pro european mps and it could push her off to a soft brexit trajectory. the give us an update on current account deficit of the united kingdom?

spend hours on this. will we see a further deterioration in the current account deficit? with the flows of money and goods in and out of the european kingdom? dominic: i don't think we will see a significant improvement. we are not looking for a big widening. but the point we have made is that people talk about a competitive sterling boosting exports and creating industry balancing and we are not seeing that happen. the trade data has continued to widen in terms of the trade deficit in the last few months and it is hard to see where the rebalancing comes. to need more capital inflows keep your currency where it is. and with the amount of uncertainty we have just spoken about here in terms of customs unions and the relationship with europe, where does the money come from? most of it does come from the rest of europe. see thes difficult to same level of financing, given the difficult negotiating process, which we are about to

head into. we haven't even started. francine: we will be back with dominic bunning and mujtaba rahman. coming up later today we hear from jeremy corbyn at 11:00 a.m. in new york and 4:00 p.m. in london. we will ask in what he thinks of a trade presidency. and i'm sure security will come up. this is bloomberg. ♪

tom: "bloomberg surveillance." everyone, thrilled you are with us. michael mckee is with us. he is just back from peru. what did you learn? michael: we learned that the united states and donald trump are on everyone's mind.

21 heads of state therefore the pacific economic cooperation foreign meetings. all he talks were about whether the u.s. will withdraw from the world and not engage in global trade. tom: are you being considered by the transition team? [laughter] michael: i doubt very much but the one thing we have learned is that you have no idea what he will do. this weekend he nominated people for jobs that nobody was surprised about. jeff sessions for attorney general. but the people he is interviewing for the next round of jobs, there are surpris -- next round of jobs, there are surprises. mitt romney. he has broadened his search for treasury. his finance chief is still at the top of the list but he is talking to people like jonathan greg.

and david mccormick, the president of the bridgewater secretaryormer deputy for international affairs. he has experience in that building. francine: so give me a sense of how likely it is that we have a new treasury secretary by the end of the week? are these -- interviews or negotiations? does he need to convince them or are they convincing him? how does this work? normally, that would be the case. the president-elect has a transition team who vetted people and they come in at they see if they see eye to eye. mitt romney see eye to eye with donald trump on the idea of deporting millions of people? i'm naturally he can but that is a decision for mitt romney to make if you were offered the job. it could be that trump is just trying to show he is inclusive. i think we will have nominees

for these jobs by the end of the month. we will get into the holidays here in the united dates so it isn't clear we will get everybody by the end the week but he has to move fairly quickly. they have to start getting ready for confirmation. and getting confirmed to a cabinet job is extraordinarily difficult. of tax returns, all kinds of information about your personal life -- it takes a long time to get that together. francine: but we do know he wants someone pro-business and pro-market and how different is that from the appointments so far, given to loyalists? michael: that is the question. will he go with loyalists or those who can operate a more pragmatic program? one of the problems is, we don't know what donald trump actually stands for or wants to do. he has been on all sides of many different issues and it isn't clear what he wants. if you want somebody who takes the ball and runs with it, then

maybe someone who has been in treasury before will be the choice. you have had 18 administration said you have followed, back to woodrow wilson, and the cabinet is sometimes run off the desk of the president. do you have an indication of that? michael: george w. bush wanted to keep a tight hold but obama set up a team of rivals and brought it back into the white house. case ofprobably be a where he has core ideas but lets other people do it because he doesn't seem to have specific details. tom: anthony, run the video again of donald trump with the vice president-elect behind him. give our guests an update on the impact of mike pence? is he running the whole thing? that is the saturday night live. francine: this is new jersey,

right? michael: yes, he owns a golf course there. tom: in the saturday night live skit -- is michael pence running things? michael: how it appears is that mike pence will have an extraordinarily strong role in this administration. there are talks of trump being chairman of the board and mike pence being ceo. trump has no experience in government. relyingis point, he is on mike pence to guide him through the process. when he moves into the oval office, will he take more command? hard to know. the markets seem to be going through a leap of faith that he can spend trillions and the markets believe he can reflate the economy. will he succeed? dominic: at the moment, the market is going through the phase of hoping for the best and

forgetting about the negatives and challenging things he said. reflationaryg at trade, infrastructure spending -- generally that is good for the dollar and it boosts domestic growth. i can see why the dollar is getting support. further down the line, we have to start to ask questions about when we will see some of the more challenging aspects of the policy coming through. the targeting of china, renegotiating nafta -- so far we have been looking and seeing this like a tennis match. it is all nice to look at and then the smash comes. and then we are in a different world. thet now we are looking at rally ended his gentle but we will see a smash at some point. tom: that was a tennis update from our tennis broadcaster. thank you. data this morning -- fairly quiet.

onrling is a little weaker the theresa may comments. stay with us, worldwide. this is bloomberg. ♪

tom: good morning. thrilled you are with us. wednesday,sday, thanksgiving, friday. right now, the bloomberg business flash. incoming senate minority leader, chuck schumer, has drawn a line in the sand for the next of ministration. stopping donald trump from repealing the dodd frank act. trump said he would scrap the preventing another financial crisis. shares of the japanese air bag maker at the center of the biggest auto recall soared today. up as much as 18%. there is news that other airbag makers may by the company. the social network will hire 500 employees, increasing the british headcount by 50%. facebook is moving to a london

headquarters next year. many of the new hires will be highly skilled engineers. that is your bloomberg business flash. i am taylor riggs. and dominic rahman bunning are here with us. we will talk emerging markets right now. two wonderful guests. with achen this weekend spectacular brief in the new yorker magazine on the philippines. it is really something to behold. i don't have an opinion but if you need a one piece, he killed it this weekend on the gentleman from the southern philippines. here is the currency chart. it is simple. select all the other e.m.'s. all different but all the same. weakness, there is the financial crisis in red. help us here with the contagion

and the correlation of all of these different stories? dominic: i think the interesting thing with this chart, in the philippines in particular, is how politics has become centerstage for most currencies. in the past we were looking through political stories in a lot of dm countries and currencies, we were willing to be positive despite challenging politics. in the philippines, the story has flipped. the president came in, people talked about the positive side as now he has come in and we have seen pretty maverick comments and that is what happens when you elect someone who is more of a renegade. and making it parallel to trump, at some point you get those comments coming through as well. you see challenges to global trade and global negotiations and how the geopolitical scene

works. and that is when you get uncertainty and the downside risk. so the philippines, there is a risk there but there is also a risk in turkey and south africa. tom: that is where i wanted to go. bring up the chart. you have turkey. the question i have, are e.m. currencies different than they previous crises? do you buy the idea they can be strong standing and distant from chair yellen and others? mujtaba: absolutely not. particular, we see the internal political dynamics driving the market outcomes, in a very material way. the president's desire to seek an executive presidency and to strip the prime minister of power. i'm talking about a fairly ineffective stance against isis and terrorist low back in turkey

proper. talking about the fight against , combining with nationalists to lock up the kurds. we see the risk of the eu-turkey deal, more broadly, turkey's relationships with the rest of europe. all of those are front and center when we think about turkey and i think they're having a material impact on the currency and broad asset markets. francine: whether it is nafta or nato -- does a donald trump presidency mean the world is more or less secure than six months? -- secure than six months ago? mujtaba: less secure. he is talking about the eu unraveling, the eu and euro in competitive terms. he is clearly not a huge fan of nato, that creates a large cause for concern in central and

eastern europe and in scandinavia. all of those questions are existential and that creates concerns about the global security architecture that has defined the world since 1945. there he good. thank you so much. mujtaba rahman and dominic bunning. arguably, the interview of the week. martin feldstein will join us. to talk about -- trump, economics and the fed after chair janet yellen. stay with us, worldwide. this is bloomberg. ♪

morning, quiet markets yet persistent erosion of

emerging-market currencies. trump economics and stimulus affect any and all. a transition team to the west. holding court in new jersey, will we see cabinet announcements on monday? and been there, done that. martin feldstein. good morning, this is "bloomberg surveillance." we are live from our headquarters in new york with francine lacqua in london. what was the new comments from teresa may? working: no plans about councils or german style boards, which, basically, some people interpreted in the past -- in germany they have trade unions or worker representatives. they said this is not what we're trying to do here. she has talked about a fairer companies giving back a little bit more. i don't know if that is through

tax incentives. we may find out more when he budget gets released on wednesday. tom: very good. we will see what the incentives are on that. has endedgela merkel the speculation that she is running for a fourth term. she is positioning herself as a force of stability in uncertain times. ae says she intends to serve full four-year term as long as her health allows it. in france, a new front runner for the french elections. minister. prime he won the first round by 16%. he has the most free market platform among the seven candidates. againill face each other next sunday. nicolas sarkozy has been knocked out of the race. theresa may is offering and all of ranch to businesses. in a speech today, she said she will not force companies to

appoint union representatives to corporate boards. she said in the past, it was important for workers voices and consumer voices to be representatives. donald is interviewing top wall street executives for treasury secretary. mccormick,was david wilbur ross and jonathan greg, local head of real estate at lack stone group. global news, 24 hours a day. powered by our more than 2600 journalists and analysts, in more than 120 countries. i am taylor riggs. this is bloomberg. tom: thank you so much. we need a marathon update. ran theiggs, philadelphia marathon this week and survived. survived and i am here, walking. tom: i don't know how you do it. congratulations on making it 26 miles, one foot. let me do a data check.

oil has a bid in the euro. not on the parity watch now but we may get there. next screen please. , 13.29. volatility grinding down. as thehow the peso emerging-market. francine: this is quickly my board, on politics today. crude is helping to lift the commodities. a bit of opec optimism as the dollar is weakening. you can see we are flat for the european stocks and the yen. tom: thank you. there are images of an election that you will never forget. there i was, sitting behind -- and martin feldstein as president trump greeted the economic club of new york. i must ask the obvious question, have you been considered or

would you consider serving in a trump administration? martin: i have not heard from president trump -- tom: he is not president yet. martin: president-elect trump. -- what's talk about does the modern analysis get wrong about reaganomics? martin: it was really quite a success. i think the thing we forget most is that by the time president reagan had gone through his eight years, the fiscal deficit was very small. , if you look at the primary deficit. tom: the key distinction, which we didn't here in donald trump's speech, but we do hear from his supporters -- dynamic scoring. would ronald reagan have known dynamic scoring? an old idea and it

took a long time to get congress to go along with it. it basically says that when you change tax rules, behavior of taxpayers changes. taxesat means if you cut by 10%, you don't lose 10% of the revenue that you were getting before. because taxpayers change the way they act. tom: if you cut by 10%, how much do you get back through dynamic scoring? martin: 3%, 4%? it depends on how you cut it. where in the distribution you cut it. francine: right. talk to me a little bit about how ronald reagan is different from donald trump? there have been a lot of parallels. overall, ronald reagan had served when he was appointed president eight years as governor of california. donald trump never been in charge. that's right.

ronald reagan had been governor of our largest state for a tears -- largest state for eight years. but so what? francine: do you not govern differently if you have done this before? there must be mistakes that you learn along the way? martin: that's right. and i'm not saying, in any sense, that donald trump is ronald reagan. of course, a president faces a much broader range of issues because he has to deal with international, as well as domestic issues. and ronald reagan had been thinking about and preparing for the national-domestic issues in a way that donald trump has not. so we really don't know what detailed policies donald trump will follow in a way that was pretty clear about what ronald reagan wanted to do when he came

in back in 1981. francine: do you think donald trump is looking at the reagan presidency? how he spent and funded things? i have no idea. i have no idea. what is important this time around is that congress is going influential, maybe even dominant, in the details of the policy. tom: if we assume a republican majority, and there was an article over the weekend, about democrats never winning again -- it takes you back to the 1920's. we don't need a dissertation on coolidge and hoover, but is the lack of gridlock a path to instability? martin: no. i think we going to see a very responsible republican majority in the house coming forward with detailed ideas for fleshing out thatchieving the goals

donald trump talked about. at least, that is my hope. tom: i agree that it is a hope. .t may be an audacious hope where are the checks and balances that you need when you look at fiscal politics? the market is a check, isn't it? martin: well, the market has not been a check. the bond vigilantes have not been there. -- kilbyilled the bod bond vigilantes. tom: can they come back like in "game of thrones?" seein: we are beginning to long range up. and if i am wrong and they do not come through with a fiscally responsible budget, then we see them moving up more. tom: is janet yellen behind now? as the bond vigilantes take over? martin: well they have not yet

taken over. martin feldstein will continue with us. lots to talk about. and we will look at the nation's budget deficit later in the hour. aming up on bloomberg radio, needed update with dr. swann on the spirit of american manufacturing. with martin feldstein, this is bloomberg. ♪

pictures ofve washington, d.c.. what a beautiful monday morning. the u.s. celebrating thanksgiving later on. quiet markets in preparation of the festivities. back, he needs to keep an

eye on president-elect donald trump's whereabouts. tom: it will be interesting to see how those go. let's get to taylor riggs. iran is saying it is highly probable that opec members will lead to a cut in oil production next week. i rock says it will offer proposals to bolster unity. opec hasn't cut production in eight years. the oil prices have rebounded since hitting the lowest level two months -- lowest level in two months last week. they be european central bank has said there will be no first mover advantage when it comes to getting regulatory approval. that is according to people familiar with the discussions. don paulson went long on donald trump when most of wall street went short. his funds have a stake in fannie mae and freddie mac whose shares have soared. he is a trump donor and advisor

and is betting the election will flow tot more profits shareholders and less to tax holders. that is your bloomberg business flash. tom: thank you. we need to speak with martin shen occur -- speak with martin scheneker. martin: not in my memory. day to day, the changes. let's bring up the different changes. one of them is wilbur ross. at --e a philanthropist and david mccormick to us serve the nation. he has been in treasury as well. are these new names or have they

been vetted before? : these are new names that came up over the weekend. donald trump is obviously casting a wide net. and it is unclear whether these thingsre on a horrific or whether they are under serious consideration. steve fromll have goldman sachs as a front-runner for the treasury post. francine: what does this tell us again? trump has put loyalists in charge of key positions. time hebe the first breaks away from that? or will he go for someone who has supported him? margie: it will be interesting to see what the next cabinet posts will be. mitt romney over the weekend. our sources tell us he is under serious consideration for secretary of state and that would be a remarkable appointment.

and it would suggest that donald trump is acting as an independent rather than a republican. tom: martin feldstein is with us this morning. couch time inus the oval office. how does the treasury of secretary -- how does the treasury secretary fit in on monetary policy? martin: it must depend very much on who the man is and his background. the treasury secretary when i was there likes to say that he was the president's chief economic spokesperson. so his job was not to design policies but to sell them. tom: but to your point. totally different than a guy who works within massachusetts politics. each treasury secretary is different. absolutely.

and they take on a different kind of role depending on the president and their own strengths. you have covered this more than anyone else in the newsroom. do you need a white house that is working together? -- thet good to have cousins is so different, is it good to have divided opinions in the white house to get the most out of people? if donald trump puts a lot of guys and girls who don't see eye to eye? managemente is a philosophy of cats in a bag where you throw everybody in and see who comes out. of having people you people he really trusts and knows well around him. the key thing here is that donald trump does not know what a lot of these people personally well. so he will make selections, and it will be on the job training, in terms of his cabinet. what do you see

president obama's legacy to be? we saw him fly from berlin to go to the lima meeting. we have hardly seen such a stark contrast. what will president obama be remembered for? i do agree with him when he says his legacy will be shown not in this generation, but the next one. when you look at youth voters in the united states, in enamored with president obama, i think written in 20l be years rather than immediately. tom: very good, marty schenker. speaking from washington, i'm not sure he is being considered. vocal. a little bit fo nicholas burns, look for that at 7:00.

with martin feldstein, next, the fed. this is bloomberg. ♪

tom: "bloomberg surveillance." thrill do are with us. terrific reading this weekend. an exceptionally strong weekend of thoughts on politics, investment, finance. project syndicate, it goes right to martin feldstein in the moment now and in the moment in

a couple of years. a radical hawk appointed by donald trump would end up in the minority that could be consistently outvoted by the majority.ish if donald trump cares about his base, he should appoint dovish fed governors who will favor easy money policies that weaken the dollar. only time, and the market vigilantes, will tell if donald trump has struck the right balance. that is an interesting nuance piece by professor roubini. what kind of next chairman should donald trump select? he will have a very different fomc by the time he picks the next chairman because there are two vacancies on the fomc now. two governors. republicans have control of the senate, when he is president he will be able to

pick two people for that and it will change the balance. even in the last vote of the fomc, there was dissent coming from current members of the fomc , against the continued over easy monetary policy. so i think there will be pushed back away from that. tom: are we distracted? are we going to have a fight here with chair yellen and president trump? think so.don't i think the fed's independence is well-established. the real question is -- what kind of decision will he knew fed make? and what kind of decisions will have to deal with? inflation is the first thing that comes to mind. 10%, cane ends up with that reflate the u.s. economy? well, it is not clear that the spending programs and the tax programs are necessarily

going to be inflationary. it depends on how they put before them. so my view is, the key thing is to try to achieve the goals that the candidate set out during the campaign. but to do it in a fiscally responsible way. to balance tax cuts and spending that,ays of offsetting through eliminating tax expenditures. francine: right. but going back to your initial point, which is brilliant, what kind of economy will be fed in hair it? what are the pitfalls they need to deal with? and if donald trump as president turns around and labels china as a currency manipulator, then we may see more international gyrations? martin: i think that is a secondary issue. the u.s. economy now is very strong. we have essentially full employment. inflation beginning to creep up. wages rising at a more rapid

rate. and i think the danger in the economy, looking forward, is that asset prices have been pushed up to exceptionally high levels, by years and years of , bothow interest rates short-term and long-term. and i think that is what the fed should have been dealing with a couple of years ago. and now faces going forward. tom: because of time, i have to bring this up. paul krugman in the new york times today suggest that infrastructure will not be an easy pass. the idea here of the way we do infrastructure is critical. of this.n the crucible in a white house long ago. is there a correct way to do infrastructure spending? martin: the first thing is, they have to have some plans, some details. what we learned with president obama in the stimulus package,

there were several shovel ready projects, there weren't. this isn't the right time. tom: very quickly, where did the vision come from to do the big dig? it changed to the city. right? a big overrunwas in the cost of doing it. also. tom: yes there was. there was a little bit of an overrun. i am being facetious. in the next section, chris verrone. next. this is bloomberg. ♪

francine: this is "bloomberg surveillance." on to st. paul plus cathedral.

new that is where theresa may spoke to cpi business group. now let's get more on some corporate news. let's get straight to the bloomberg first word news with taylor riggs. taylor: we are going to stick with that theme. british by minister is offering and all of branch to business. she said she would not force companies to appoint workers or union representatives to corporate boards. she also observed -- he also urged executives not to miss the opportunity presented by brexit. the decision gives us a once in a generation chance to shape a new future for our nation, the chance to build a stronger, fairer country. that is the kind of change people voted for, not just to leave the european union, the to change the way our country works and the people for whom it works forever. britishmay spoke at the

-- and annual covers. if he thinks core american values are at stake -- the president spoke in lima, peru, after meeting with asia-pacific leaders. syria has refused a united nations proposal for the embattled city of aleppo. the government amended that rebel forces leave the city. global news 24 hours a day, powered by more than 2600 journalists and analysts in more i am taylorntries, riggs. this is bloomberg. tom: thanks so much. martin feldstein, a few years ago -- we are going to have a lot of fun with maps and charts right now. christopher verrone with me. i am in new york. francine lacqua is in london.

chris, here is a chart, which is the great overweight chart. ,he value line arithmetic chart perception of stock market and the value line geometric equal weight chart on the bottom. what a difference the big countries have made, haven't they? chris: that value line is the most important index we look at every single day. this is 1700 issues. it is a good representation of what the average stock is doing on any given day. what i think is telling is the average stock is doing better than the index. last weekw over the or two, in particular with small caps, all-time highs. the number of stocks making the high since 2000 is the best since 2009. so it is bullish. apple, apple, is apple as a proxy for big stocks.

let's bring up the value line for geometric. it was a yellow line on the last chart. here it is back 40 years. you have a great boom in all stocks, equally weighted, and that the big cap's takeover. does that mean you load the boat on small caps, or can you still own big multinationals? chris: you want to own down the capitalization scale. that is the message of the market. it is a reflection of two things -- number one, when credit conditions are supportive, you often see smaller cap issues lead. when liquidity is supported as well, you tend to see smaller cap issues lead as well. m2 growth is running 8% year-over-year. if money growth dominant -- if money growth -- of -- it is greatthink technical analysis, but you have a new president that will be inaugurated january 20.

does it not change the credit conditions and liquidity, and do we not need to look at these corporate profits differently? compelling is so from the last two weeks is nothing has changed from a leadership standpoint in our work. all of the groups that have been getting better throughout the summer -- transports, banks, industrials -- that has been exaggerated in the aftermath of the last two weeks. if anything, the market was telling us for months and months that the leadership picture was changing, and in the last two weeks a lot of these groups have voted decisively on what his leadership and what is not. i am inclined for banks to stick with industrials. are they oversold tactically? probably. when you look at technicals, if there is a tax deal for a lot of these companies, big cap, to repatriate some of the money,

does that move the needle? chris: absolutely it moves. what we have seen over the last week or two, particularly with the big cap industrials, the market discounting some kind of change to the tax code. i want to respect that message from the market. i would also note that all the fang stocks have sold off the last week or two, technology as a sector have been very good down the cap scale. tom: we have two different animals at her desk this morning. martin feldstein is an economist. professor feldstein, help christopher varona with your worry about asset bubbles and the money moving incentivized by the fed toward the equity markets. is his job at risk echo martin: i am sure his job is not at risk. on the other hand, a lot of investors positions may be at risk because we have seen the broad equity market, the s&p 500

get to a point where it is 65% above its historic average, and that is not because of earnings or expectations, it is because what we have seen is an exceptionally low interest rate leading investors to drive -- chris: i would ask mr. feldstein, would you argue that bond investors or equity investors are at greater risk here? when i look at the world at the moment, the chance of a big accident is greater in the bond market at this point than in the equity market. martin: i think they could both be at risk. what we are seeing now is that long bond interest rates are rising without the stock market responding negatively to that, but i think if we continue to see long interest rates rising, it could spillover. of this? is the why

chris: if you look at the 1950's, bond yields started to move in 1951. it took 10 years before the equity market was inflicted with damage, the early 1960's, when the long rate was about 4.25%. tom: do you assume that trumpnomics pops the relative gdp? chris: i think the market is reflecting the message of the moment. that is the message at the table for the next several weeks. bond yields are telling us that as well. martin: the other thing is that big tex change affecting multinational corporations -- i think if we move -- big tax change affecting multinational corporations session if we allow companies to move back from abroad rates, we will see good things from those kinds of companies. tom: francine, this idea of repatriation and doing it the right way --

francine: in all sorts of ways for companies -- i guess the real losers in this would be some of the havens or some of the places where this money has been put. is, whaton to chris does this mean for the rest of the world? you are still bullish on japan. where do you see europe? chris: europe is getting better here. if we look at the european cyclicals, these are groups that over the last 24 months are down 50% or 60%. you have seen some devastating bear markets in those sectors. we think they are turning and that they reflect cyclicality. i would say the same thing with japan. we think it is improving. the global construct here is a move toward cyclicality. we see it in japan, in europe, in the u.s. we think that his leadership, and that is where we want to be. francine: chris verrone, thank you very much.

tomorrow we will talk but immigration, some of the challenges that we see. angela merkel says she would be up for -- this is bloomberg. ♪

francine: this is "bloomberg surveillance." tom, when you come over to london, this is what we are getting from theresa may's --keswoman, saying the u.k. it is the latest on foreign policy. let's get straight now to some

corporate news with the bloomberg business flash. taylor: global regulators say u.s. banks present a bigger risk to the financial system than they did last year. according to the financial stability board, citigroup, bank of america, and wells fargo all face higher capital surcharges to ward off threats. facebook is ramping up its presence in the u.k. the social network with higher 500 employees, increasing its headcount by 50%. facebook is moving to a new london headquarters next year. many new hires will be high skilled engineers. in chicago workers posco here airport may go on strike this week. one of the busiest travel times of the year. , -- baggageer's handlers, kevin cleaners. it is unclear how -- baggage

handlers, cabin cleaners. is the conservative that liberals respect, someone who has nurtured our physical -- our fiscal policy and given us consistent with them on what to do with the deficit. what a political debate this is. with us, chris verrone of strategas. and martin feldstein. let me bring up a chart that you know and i know, the clinton surplus in the middle. the protracted deficit of the 1970's and the 1980's when you served the nation. the financial crisis in blue. the red circle is the congressional budget office, 10 years out.uess how does president from act given this chart? i hope he acts responsibly, in a way that starts bringing the deficit down. i think he could. tom: within trump economics, the great plug-in is gdp growth.

everything the cbo does, or when you served at the white house. do you look at his guesstimate of 3% or 4% real gdp growth as a fantasy? martin: it is hard to achieve given that we are starting at full employment. when ronald reagan came in, we were in a serious recession, so the economy could produce strong growth by recovering. but now we are at the ceiling. tom: we go to francine lacqua in london. help chris verrone here. are we going to see the price of this, permanent, higher interest rates? martin: i think interest rates are very low now. they should be higher going forward. professor, what are we going to work on? what is president-elect trump working on? is it real growth? the u.s. from the world perspective is not doing that badly, so how many levers does he actually have? martin: he has a lot of

leverage. the key thing is what kind of tax reforms they do both at the corporate level and at the personal level. -- the u.s.x reform is way out of line with what other countries are doing. we tax international profits the wrong way. we have a domestic tax rate which is too high. so we need to change all of that. personal rates, especially for high income taxpayers, have gone up dramatically over the last couple of decades. so i think the time has come for a serious relook at the personal tax rules. francine: will it build quality jobs that people want, or will it be difficult jobs that people do not want? martin: i think you put your finger on the keep, which is quality jobs and we do not need more jobs because there is full employment. what we need is to improve the quality, and that is where that business investment will work. tom: professor, let's go to the

trump emotion. justin fox writing on the return and sustenance of blue-collar jobs -- welders, painters, construction people. the quality blue-collar jobs that move somebody from $30,000 up to to $40,000 a year $60,000 year across a lot of america. is that from the legislature on capitol hill, or can a president drive that debate? martin: changes in the tax rules that lead to more business investment will help on that. but it is not going to be a seachange. what we are down to now in industrial jobs, production jobs, weigh less than 10% of the labor force. so those jobs are not going to come back to 30% of the labor force. tom: chris verrone, buried in your research in the last week in industrial stocks is a

moonshot. is it sustainable? totoo late to -- mi too late invest in industrial companies? chris: it is sustainable. in the last four years alone, there have been 20-plus pipeline projects in pennsylvania alone that have been canceled. even if some of them get back online, that creates some of the jobs we are talking about, relatively high-paying, high-quality jobs. if there is a sector or group that benefits, it is industrials. tom: chris verrone with strategas. he is more than skeptical about gdp growth and trump economics. will join usar tomorrow. he has been dead on on tepid yet glimmers. real optimism on gdp growth over the weekend. stay with us. this is bloomberg. ♪

tom: foreign-exchange report. dxy near 101. further renminbi weakness.

that is managed by beijing. proxy for e.m.. francine: coming up shortly is america's."aybreak: alix steel, what are you most excited about? alix: a commodity rally -- we will be digging deeper into that. what is the state of political risk over in europe, and what is the state of political risk here in the u.s.? we will tackle that in a for mental that in a fundamental market perspective. we would talk with bob doll to give us that perspective. and peter kierkegaard will be taking deeper into what is happening with the french elections coming up in 2017, with merkel deciding to run for fourth term. u.s. regulations better than nicholas burns? we will speak with him as well. there withlix steel

the latest, coming up shortly. the former french prime minister has become the new front runner in the 2017 election. first of all, this upended the 2017 race. very few people expected this. sarkozy is out of the way, and fillon could take the lead in 2017. >> he has been making an impressive comeback over the last couple of weeks, since the election of donald trump in the u.s. no one was expecting him to be the real new front runner. the gap between him and the , who hasndidate, juppe been the front runner, is huge. 16 percentage points. that is good news for the runoff

next sunday. nicolas sarkozy, who was the third man in the first run of chancemaries, a very big he will be the nominee. francine: give us a sense of what he stands for. he is a very free market -- some of the platforms are working more, working better? caroline: you can say that his role model is margaret thatcher. he is very in favor of free market policies, less public sector, less tax. he wants to extend the 35-hour week to 39 hours. expand thets to retirement age to 65. , andright-wing program many voters in the first run of the primaries.

caroline connan, thank you so much. chris verrone of strategic is, and martin feldstein of harvard university. milton friedman wrote "the moral consequences of growth." we are seeing a new populism amid a new capitalism. when you look at the world order, is it going to be a new capitalism in france, italy, america? what the think that is public wants to support. we see it not just in the presidential election, but in the congressional elections and state elections. i think something different -- we are going to go back to where we were with ronald reagan and those kinds of pro-market -- tom: but the market cannot go back. we are dealing with the political economics of the moment. you have to do with my hard cash

and my underfunded retirement account. chris: i would add that we had the pleasure last week of meeting with clients in italy, and italian clients are more likely to vote no in the upcoming referenda because they do not perceive any economic fallout from the trump win or what happens in the u.k. there is back against the global elites, and it is reflected in how the market has moved in the last several months. tom: let me circle back to my first question. if mr. trump calls, how will you respond? martin: if they said they would like to talk with me, i would be very happy to talk with them. tom: martin feldstein, thank you so much. professor at harvard university, arguably founder of the greatest economic course on the planet. chris verrone, thank you so much. francine, what a most interesting week in london. i came away with the resiliency of london.

i found it extraordinary, the rebound from brexit. francine: the readout is quite significant, but a lot of people are saying brexit has not rebound is -- the quite significant, but a lot of people are saying brexit has not started yet and we do not know what the tax regime of a lot of businesses will look at. we hope to be wiser when we have the statement on wednesday. tom: a good monday to get started on this holiday week. tomorrow, we will move the discussion forward. david westin will join us on the brookings institution, working with chairman bernanke on economics and politics three david russell with us tomorrow. this is bloomberg. ♪

toidjon: good morning and welce

"bloomberg daybreak." the markets, after two weeks of games -- of nine point on the dow, four points on the s&p 500. a rally in the commodity market. .rude advances after 10 days of dollar strength, we take a breather in the fx market. alix: markets take a pause. the dollar weakens. commodities getting that boosts. opec will agree to cut output. copper up 2%. francoisime minister fillon is a new front runner after -- after knocking out nicolas sarkozy in a surprise victory in the first run of primaries. angela merkel announces she will run for a fourth term in germany. donald trump interviewed wall street veterans for the role of treasury secretary sunday at the trump national golf club in new jersey.